After a fairly short-lived series of higher troughs and highs within the confines of a three-month up-channel (yellow), Bitcoin [BTC] went south as it dropped below some critical price points. While the near-term trajectory clearly revealed bearish strength, BTC HODLers defended the 16-month floor at $28.8K.
The king’s coin was now in a critical position. The $30.8K to $31.4K range could set the stage for a rally on both sides. At the time of going to press, BTC was trading at $30,498.
BTC Daily Chart
Shortly after the decline in its ATH, BTC saw a gradual but consistent collapse at its highs. The sinking phase turned into a tight between the $34.4K and $47K that lasted for more than four months.
The recent bearish pull of the 61.8% Fibonacci resistance caused a very volatile break. As a result, BTC sank below the $34K level and propelled a 36% retracement to its 16-month low on May 12. The recent recovery has brought a bearish bullish wedge on the daily timeframe. With the EMA ribbons and Fibonacci resistances limiting most bullish recovery attempts, the next pair of candlesticks would be critical in determining the currency’s future moves.
With a congested gap between the EMA ribbons, BTC could fall below its 23.6% Fibonacci level. Such a move would open a path to a rising wedge breakout towards the $28.8K long-term baseline. On the other hand, if the bears decline in anticipation of high buy volumes, any close above $30-$31K would make room for a retest of the EMA ribbons.
The RSI’s demise from May 4 finally settled down at the 24-mark support. A sustained rebound from the oversold lows would be likely only in the near future. However, the magnitude of this rebound will depend on buyers’ willingness to increase purchasing volumes.
Also, the On Balance Volume underwent a bearish divergence with price over the past week. This reading could be a bummer in BTC’s efforts to find a robust close above the Fibonacci level of 23.6%.
While it may not be an exaggeration to say that bears have unequivocally steered the current trend, the king’s coin is walking on eggshells. An ongoing close below the $30.4-$31.3K level could rekindle some selling pressure. In that case, a close under the wedge could lead to unwanted losses.
Should sentiment improve enough for buyers to recoup, investors/traders should watch for a close above $31K to take advantage of short-term gains.
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